The nation’s four largest brokerage houses are expected to contribute 20 billion yen to a securities safety fund so clients of bankrupt Sanyo Securities Co. can withdraw assets from the failed firm, sources said Tuesday.
The Finance Ministry has requested 10 billion yen from Nomura Securities Co., and 3.3 billion yen each from Daiwa Securities Co., Nikko Securities Co. and Yamaichi Securities Co., officials of the ministry said. Its request comes only a day after Tokyo-based Sanyo, a second-tier brokerage, filed for protection from creditors under the Corporate Rehabilitation Law, thus becoming the first listed brokerage to fold since the end of World War II.
Although the fund, which has assets of about 35 billion yen, is only allowed to provide up to 2 billion yen to each bankrupt brokerage that seeks the funds, its limit will be lifted for the protection of Sanyo clients.
The government will give priority to protecting investor assets entrusted to Sanyo Securities Co., Prime Minister Ryutaro Hashimoto said Tuesday.
“I have instructed government bodies concerned to take steps to secure transparency in the process of dealing with Sanyo Securities based on the Corporate Rehabilitation Law, and to protect investors’ assets entrusted to it,” Hashimoto told reporters. He said he does not think the collapse of the second-tier brokerage will lead to another securities house failure.
Chief Cabinet Secretary Kanezo Muraoka said the same day the Sanyo Securities bankruptcy will have little impact on the stock market, because the failure is apparently the result of bad loans held by its affiliates, not from its main brokerage operation. Its liabilities totaled 373.6 billion yen.
Liabilities at Sanyo exceeded assets by roughly 76 billion yen, according to the Finance Ministry. The brokerage has about 60 creditors and holds 400,000 accounts. “The brokerage industry will not be disturbed, because the market has already digested it,” Muraoka told a regular news conference, noting that stock prices were moving in a stable manner in the Tuesday morning session.